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Financial repression: what does it mean for savers and investors?

Published online by Cambridge University Press:  30 July 2014

Paul Fulcher ,
Richard Boardman ,
Ian Collier ,
Hans-Christof Gasser ,
Rod Price ,
Paul Shelley  and
Sarah Softley
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Abstract

At the end of 2013 the real yields that the UK government had to pay on its debt were negative over the whole curve. Several possible explanations are available for this phenomenon – central bank action, regulatory changes, demographic developments and economic conditions. The first two can result from deliberate interaction by the state into the financial markets and can be labelled as financial repression. We explain the historic precedents for Governments to use financial repression to manage their debt, look into the influence of regulation on asset allocation for insurers and pension funds, and introduce the concept of a balance-sheet recession.

Keywords

Financial repressionlow ratesreal yieldsbalance-sheet recessionregulation

Information

Type
Sessional meetings: papers and abstracts of discussions
Information
British Actuarial Journal , Volume 19 , Issue 3 , September 2014 , pp. 757 - 771
Copyright
© Institute and Faculty of Actuaries 2014 

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